6 Ways Revenue Managers Use Data to Make Their Hotel Smarter

What should revenue management decisions be based on? Revenue management decisions, at their core, must be based on data.

It’s all too easy for your potential guests to be over whelmed when they’re visiting dozens of websites and looking at hundreds of hotels. When they get to your website, make sure it’s a haven of carefully-selected images, content and rate plans.

Your hotel’s online activities should be completely focused on clarity and data-driven decisions. No matter how chaotic the rapid changes in the industry may seem, revenue managers need to hold onto their minds and stick to the data – data in all its glorious forms!

To kick off our 3-part series on data, here are 6 ways you need to use data to make sure your hotel is on the right track.

6 Ways Revenue Managers Use Data to Make Their Hotel Smarter

1. Your Net Gain per Channel

This is a familiar line, but it must be acknowledged. Instead of reviewing the demand level for each channel, analyse the net gain for each channel. The net gain from a channel is simply the revenue from that channel, minus all costs associated with it (advertising costs, commissions, etc.).

When you look at how much you get from each channel, you can only get a true sense of its value when you also understand how much you give to that channel.

How much does each channel return when commission costs are accounted for?

What’s the Average Daily Rate for the channel? It may surprise to see it’s your brand site delivering that higher ADR! Do your own analysis, and remember: numbers don’t lie.

Research which days of week bring in the most bookings from each channel. Are some channels simply cramming the higher demand dates for your hotel and contributing less to other nights? If so, it might be wise to evaluate how much availability you offer to those channels.

2. Not All Historical Data is Bad

Looking back on a regular basis doesn’t always lead to a life filled with regrets – instead, it can help you plan for the future!

You should analyse the spend and lifetime patterns of each channel to understand if they have steadily improved or decreased the amount of revenue they bring in, whether they have non-revenue benefits (like exposure) that outweigh their costs, and more.

Here’s an example: deal sites.

Yes, the rate is low and the commission can be high – but the exposure is great! Exposure, however, doesn’t pay the bills.

You need to analyse the lifetime value of guests that came to you from deal sites. Did they book again? Did they spend more than guests from other channels? If you can justify that short term pain to reward you in the long term, then it is worth doing. However, if you find that the majority of guests from deal sites do not stay again, or do not spend more while staying, it may not be worth your while.

3. Looking to the Future

Now that we’ve looked at what you can gain from the past, let’s look to the future.

Decisions on the best action to take must be based on hotel pace reports. A hotel pace report, or pick-up report, typically shows total rooms performance by market, putting the year in context. You can also create room type pace reports, week parts (weekday vs weekend) pace reports, and recurring events reports for things like New Year’s or a big local event.

Pace reports enable you to see your likely demand levels for the months ahead. Find ways to filter the data in ways that are the most useful to your hotel.

4. When People are (Actually) Booking

Looking at the average lead in time is important, but this does not account for outliers. Failing to look at outliers can be catastrophic – what if your average booking window for a certain day is 20, but, with outliers removed from the data set, really should be more like 10?

If you plan and execute a marketing campaign based on the wrong booking window, you’ll be essentially throwing money away.

You need to look at each booking window: examine who and what are booking in each window.

5. Who’s Actually Staying

There is a world of difference between booked and stayed business for some channels. So, although you may be busily inputting or seeing bookings coming in from a particular channel, they are not necessarily the ones producing the most.

This is where sentiment may become an issue, so watch out for your or your team’s feelings conflicting with the facts! A channel might be perceived as being of the utmost importance because that channel is front and centre in someone’s mind, but the reality can be different. It all comes down to the data.

Take New York as an example: hoteliers have been expressing concern over Airbnb and what the sharing company is doing to their business for several years now. However, according to pace statistics from TravelClick, they are forecasting 5.8% growth in occupancy for Q3 despite Airbnb. Airbnb certainly is cutting into the market in certain areas and causing rent and space problems in cities like San Francisco which are tight on housing, but it is not (yet) a Goliath that Davidian hoteliers must face down.

The vast majority of their business operates in a different market than the traditional hotel market. While there is crossover and lessons to be learned from both sides, the bottom line is that data should speak here – not fear.

6. Who Didn’t Stay

When you look at the cancellations coming from each channel, you need to look at the booking lead in time for those that cancelled. Is there a pattern of longer lead bookings having higher cancellation rates?

If so, how do you avert this? How do you engage better with the person who is still months away from arrival? The more time until they arrive, the more time buyer’s remorse and a change of heart to set in.

Look at cancellation pace. Normally, the pace report on bookings will exclude cancellations to give a real sense of demand. It’s important to look at the cancellation pace specifically, though, so you can gauge the expected cancellations for a future date at any given point.

Move on from the idea having a fixed over booking policy of a set percentage or a set number. There is a world of diffidence in being minus 20% on inventory 3 months out, versus 3 days out.

Conclusion

The remit of a revenue manager is ever evolving and all encompassing. At a time where the issue is becoming “what to do with all the data,” the necessary focus in addition to the right tools is how revenue mangers will succeed.

Be sure that all your major decisions are based on data. The accuracy and relevance of the data you have will depend on how good the tools at your disposal are.

Just like the virtual hotel, your hotel’s software applications need substantial and on-going investment. Is your hotel ready for success?

Maeve has over 10 years of reservations and revenue management experience working with some of Ireland's leading hotels and hotel groups. As an integral part of the Net Affinity team, Maeve is responsible for managing, developing and,building relationships with our major key accounts to ensure continuous revenue growth, enhanced profitability and strategic online development.
With broad experience including revenue management, online marketing and distribution, Maeve has been entrusted with initiating, developing and leading contemporary "best practice" revenue management techniques and intelligence for our clients within Net Affinity.